European stocks and US futures have fallen slightly as oil prices rose for a third session as fresh hostilities flared in the Gulf after US-Iran peace talks stalled.
Europe's STOXX 600 index was down 0.4 per cent in early trading on Wednesday while futures for the US S&P 500 slipped 0.1 per cent.
The AI bull run pushed on unimpeded in Asia, however, where stock indices climbed to record highs in Japan and Taiwan.
An Iranian missile attack damaged Kuwait's airport on Wednesday and the US military hit sites near the Strait of Hormuz as the shaky ceasefire between the two sides was once again severely tested.
Iran and the United States said last week they had reached a tentative deal to halt the war, but they have yet to sign off on anything.
The conflict could slow global growth to rates rarely seen outside of crises such as the 2008 financial crash and push inflation sharply higher if it continues into next year, the Organisation for Economic Co-operation and Development warned on Wednesday.
Oil prices crept back towards the $US100 mark, with global benchmark Brent crude up 2 per cent to $US98 a barrel.
"Last week ... the trajectory was towards some sort of MOU (memorandum of understanding) and markets were high on the belief that that was coming," said Chris Weston, head of research at broker Pepperstone in Melbourne.
"Things are looking more precarious (now). It does suggest that people are coming back to the negotiating table with less scope to get that done and I think we're seeing some of those bets being unwound."
Stock markets in Europe, which is an energy importer and has fewer companies focused on AI, have been hit harder by the Iran crisis than their US peers.
The US dollar index, which tracks the currency against its peers, was flat at 99.31.
Currency traders were on edge, however, after the dollar rose against the Japanese yen to the 160 level at which the market tends to become nervous about intervention from authorities in Tokyo.
The dollar then dipped to trade at 159.65 yen.
The fall in the yen prompted fresh warnings by the finance minister on Wednesday.
In the tech space, the artificial intelligence theme seems impervious to war worries and Wall Street stock indexes eked out small gainsto trade at record highs on Tuesday.
Shares in Marvell Technology soared 32.5 per cent to a record high after Nvidia boss Jensen Huang called the chipmaker the next trillion-dollar company.
AI gains have lifted tech investor SoftBank above Toyota as Japan's most valuable company.
SpaceX- which is largely focused on AI - plans to raise $US75 billion ($A105 billion) in a blockbuster initial public offering, according to a source familiar with the matter.
Survey data on the US services sector and private payrolls figures are due later on Wednesday, before labour market data on Friday.
Markets, which had expected rate cuts before the Iran war, have priced in about 18 basis points of US rate increases in 2026.
A hike in Europe at the bloc's central bank meeting on June 10-11 is all but fully priced in following data showing inflation accelerated further in May, while traders see about a 75 per cent chance of a June rise in Japan.
